Online Travel (OT) OT is a private limited company in country X that sells international holidays on the internet. All of OT's current range of holidays are to sunny places with beaches. Customers can search and purchase the holidays through the OT website. Each employee at OT has a contract of employment. OT employees work in three main areas of the business: • technical specialists who keep the website updated. The specialists work in shifts so that the website can be updated 24 hours a day, 7 days a week. • customer service employees who chat online and on the telephone to customers who need extra help to purchase their holiday. • operations employees who negotiate with the suppliers of holidays and carry out quality checks. In recent years demand for beach holidays has fallen, particularly among younger consumers. Due to this fall in demand, OT has made the decision to make 20% of the workforce redundant. The Marketing manager has carried out some market research to identify new markets OT might decide to enter (See Fig. 1). Fig. 1: Market research data Primary research: A quota sample, based on age (in years) Number of respondents who would prefer each type of holiday. Age | 16–30 | 31–40 | 40+ ---|---|---|--- Skiing holidays | 65 | 30 | 5 Safari holidays | 15 | 40 | 40 Cruise holidays | 20 | 30 | 55 Secondary research: Characteristics of each age group in country X [Figure showing Average annual salary by Age group] [Figure showing Average number of holidays taken each year by Age group] The Board of Directors has decided to target the 16–30 age group with low-priced skiing holidays. There is a limited budget for the marketing of these holidays. OT will need to rely on the internet to develop the marketing mix.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [2] (a)(i) A correct definition
2. [1] (a)(i) A partial, vague or unfocused definition
3. [0] (a)(i) No creditable content
4. (a)(i) Note: A correct definition must distinguish a private limited company from any other legal structure on the syllabus, i.e. PLC, sole trader, partnership etc.
5. (a)(i) Content: A business where shares can be sold, but not to the general public. The owners benefit from limited liability. Accounts must be produced but not necessarily published.
6. [3] (a)(ii) C: Example of the content of a contract or some other way of showing good understanding e.g. a sense of security, protection, example of contents
7. [2] (a)(ii) B: Understanding that is between employer/business and employee
8. [1] (a)(ii) A: Understanding of legal document/agreement or sets out terms and conditions of employment
9. (a)(ii) Award one mark for each point of explanation:
10. (a)(ii) Content: An agreement between an employee and employer
11. (a)(ii) Examples of content: the business details / the employee's details / job title or a description of work / start date / how much and how often an employee will get paid / hours of work / holiday entitlement (and if that includes public holidays) / where an employee will be working
12. [1] (b)(i) Answer = 40+ (allow ‘oldest group')
13. (b)(i) Do not accept 40 (no plus)
14. [2] (b)(ii) Correct answer with or without working or %
15. [1] (b)(ii) Correct calculation of number of people who prefer skiing holidays (100) AND total number of respondents (300)
16. [0] (b)(ii) No creditable content
17. (b)(ii) Content: 100/300 × 100 = 33.33% (2)
18. (b)(ii) Allow 1 mark for incorrect rounding supported by working (ie 100/300 × 100 = 34)
19. [3] (b)(iii) Explanation of a disadvantage to OT of using secondary market research
20. [2] (b)(iii) Explanation of a disadvantage of using secondary market research
21. [1] (b)(iii) Identification of a disadvantage of secondary market research
22. [0] (b)(iii) No creditable content
23. (b)(iii) Note: only mark the best disadvantage written by the candidate if there is more than one.
24. (b)(iii) Content: Not specific to the needs of OT in finding a new market segment / Can be 'old' no date on the research - does it reflect recent changes in the holiday market? / No idea of the quality of the original researcher – is it biased? / Cost - OT may have had to pay for the research / Were the respondents the type of consumer to use the internet?
25. (b)(iii) ARA Possible disadvantage (K): Not specific to the needs of the business / Possible context (APP): OT need to identify a new market segment and this data is not specific to this
26. (b)(iii) ARA Possible disadvantage (K): Can be out of date / Possible context (APP): May not reflect the holiday market as it is now / Demand is falling
27. (b)(iii) ARA Possible disadvantage (K): No knowledge of the quality of the research / Possible context (APP): May not give OT good data upon which to base their decision of a new market segment
28. [4] (c) Level 2b: Shows understanding of the effect of the redundancies on two stakeholders of OT
29. [4] (c) Level 2b: Developed analysis of the effect of the redundancies on two stakeholders of OT
30. [3] (c) Level 2a: Shows understanding of the effect of the redundancies on one stakeholder of OT
31. [3] (c) Level 2a: Developed analysis of the effect of the redundancies on one stakeholder of OT
32. [2] (c) Level 1b: Shows knowledge of redundancy and stakeholders
33. [2] (c) Level 1b: Limited analysis of the effect of redundancies on two stakeholders
34. [1] (c) Level 1a: Shows knowledge of redundancy or stakeholders
35. [1] (c) Level 1a: Limited analysis of the effect of redundancies on one stakeholder
36. [0] (c) No creditable content
37. (c) Note: The business (OT) is NOT a stakeholder
38. (c) Content: Customers – worse service leading to a poor experience using OT / Owners – may have less profit as there are high redundancy costs. May eventually have higher profits as the business is more efficient. / Managers – may have less workers to supervise / Banks/lenders – may worry about the future of OT and not lend for any future ventures / Local community – increased unemployment, lower average income / Government – increased unemployment, lower income tax revenue. / Competitors – OT may lose sales so the competitors may gain sales, competitors may gain new trained employees
39. (c) ARA Example of stakeholders: Customers / Examples of effects on stakeholder: Unable to book a holiday / Examples of application/context: Because the website may be down due the redundancies amongst the technical specialists / Examples of possible analysis: Which means they are frustrated because they cannot use the website and have to search for a holiday elsewhere taking extra time.
40. (c) ARA Example of stakeholders: Owners / Examples of effects on stakeholder: Less profit / Examples of application/context: Dividends (OT is a Ltd) may decrease because of the extra redundancy costs / Examples of possible analysis: Leading to a lower income for the shareholders and a chance that they will want to sell their shares
41. [7] (d) A justified recommendation based on a developed argument
42. [6] (d) A developed recommendation based on a developed argument
43. [5] (d) A basic recommendation/judgement based on a developed argument
44. [3-4] (d) Shows understanding of the internet in one or more elements of the marketing mix for OT
45. [3-4] (d) Developed argument based on the use of the internet in one or more elements of the marketing mix for OT
46. [1-2] (d) Shows knowledge of the marketing mix
47. [1-2] (d) Limited analysis of the use of the internet in the marketing mix
48. [0] (d) No creditable content
49. (d) Note: Candidates can gain all the marks from use of one element of the marketing mix
50. (d) Content: Promotion – many ways in which the internet could be used, especially in this target market. Social media, viral marketing etc.. Allow use of specific platforms, such as Facebook, Twitter, Snapchat etc.. Relatively cheap methods of promotion, can show elements of the holiday (ie skiing) in videos etc.., good for targeting this age group and accessible on various devices.
51. (d) Content: Price – use of dynamic pricing to change prices based on demand, timing etc. Easy to adapt prices and change in short period of time.
52. (d) Content: Product - Could be tied into the product, so offer free WIFi with holidays, online catalogues and search facilities showing the product portfolio.
53. (d) Content: Place – can be sold through the internet, reduces labour costs, more likely to be suitable for this target market.
54. (d) Candidates can also use the 4C's: Cost to the customer / Convenience to the customer / Customer solution / Communication with the customer
55. (d) To award APP a candidate requires all three elements: Marketing mix (the knowledge to back it up) / The target market (16-30) / Internet